Question
1. Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial
1. Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. Tim anticipates the index to be 3.50% at the time of the 1st reset. What is Tims monthly mortgage payment going to be during the 1st 3 years?
2. In Q1, if the index resets to 3.50% as Tim forecasts, what will his new mortgage payment be in year 4?
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Financial Management For Public Health And Not-for-Profit Organizations
Authors: Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell
7th Edition
1071835335, 978-1071835333
